The NZD/USD pair rose during the session on Wednesday, but remains below the vital 0.88 handle. This level has been resistive a couple of times now, but the fact that we continue to press up against it tells me that the market has already made up its mind as far as whether or not it wants to go higher. It’s only a matter time, and quite frankly I hope that the nonfarm payroll numbers push this pair down initially. That should be an opportunity to buy “value”, which of course is always appealing. I think about the market is going higher for a lot of different reasons, and as a result I have a hard time believing that one particular economic announcement is going to change the trend.
However, that’s not to say that I’m willing to start buying randomly. I need to see some type of supportive candle on perhaps an hourly chart after a pullback in order to be comfortable buying, and I would certainly think that a break below the 0.85 handle would have me rethinking the entire situation.
“Risk on, risk off”
This pair is essentially a “risk on, risk off” type of market. If the market is feeling like taking risk is the way to go, this pair will almost always benefit. Pay attention to stock market futures after the announcement, as if they are going higher and this pair breaks above the aforementioned 0.88 handle, I think that this market makes a move towards the 0.90 level, which is a longer-term target of mine anyway.
On the other and, if we get a selloff, one thing that I’ve noticed about the nonfarm payroll announcements has been that any significant move we get almost always gets reversed later in the day. With that, I would be very interested in buying the aforementioned supportive candle on a fall, especially if it gets us somewhere near the 0.8650 level, where I see a bit of support coming into play regardless. Ultimately though, I think that the New Zealand dollar will start to do fairly well soon.